Markets

KSAU/USD bulls return, market remains coiled

  • The price of gold is back in line with the coil and would be expected to continue to rise or at least stay on the sidelines.
  • If that fails, then an even deeper move in the price of gold would be on the cards in the coming days from $1,775.

According to the previous day’s analysis, Gold Price Forecast: KSAU/USD bulls need to commit to key trendline support, the gold price found demand in the aforementioned support area and moved back into line with the broader bullish trend. Gold prices rose on Friday ahead of the Christmas holiday and long weekend, supported by cooling inflation data in Friday’s data storm.

U.S. consumer spending edged 0.1% higher in November after rising 0.4% in October, in a sign that inflation is cooling, though not as much as markets need to see to start expecting a U-turn from the Federal Reserve or slowing their rate. footpath. Year-on-year (YoI), the Personal Consumption Expenditure (PCE) Index fell to 5.5%, a half-percent decrease from October. Factoring in volatile food and energy prices, the index rose 0.2% and 4.7%, respectively, on a monthly and annual basis, in line with consensus. The bad news for the gold price is that October’s PCE inflation data was revised upwards.

Data on Thursday’s US gross domestic product and jobless claims also highlighted that the country’s economy has recovered faster than previously estimated and that the labor market remains very tight. Overall, the plethora of data does little to reverse speculation that the Fed will stay on course to fight inflation in 2023. Such rate hikes to tame price pressures weigh on non-yielding, non-interest-paying assets. is now on track for its second consecutive annual decline.

The Fed will have to do more

Analysts at Brown Brothers Harriman say markets still don’t trust the Fed. “After rising as much as 5.5% after the last FOMC meeting, the terminal rate, seen in the swaps market, fell to around 5.0%,” the analysts explained. “Similarly, VIRP suggests that a 50 basis point price increase on February 1 is only 33%, followed by a final increase of 25 basis points on March 22.” We cannot understand why the markets continue to fight the Fed. With the exception of some miscommunications here and there, chairman Jerome Powell and company have been adamant about the need to take prices longer. Recent US data confirms that the labor market remains strong and that the Fed will need to do more.”

Technical analysis of gold price

In the previous analysis, the price of gold fell to the target area and exceeded $1,784 for a 300% measured move and where the previous micro trend started at:

It was stated that a correction of the gold price would be expected, respecting the bullish trend:

Gold price update

The price of gold is back in line with the coil and would be expected to continue to rise or at least stay on the sidelines. If this fails, then an even deeper move in the price of gold would be on the cards in the coming days, making the case for a significant correction to the downside from $1,775.

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